Real Estate Transactions are Complex

I remember when we bought our first house in 1989.  We were presented with a document that was titled “Deposit Receipt.”  I accepted this document at face value, and assumed it was a receipt for the deposit we were making on our house purchase.  But as I read through this document, it started looking less and less like a “receipt” and more and more like a contract.  We never did see another contract in connection with our purchase of that house.  The Deposit Receipt was all we ever signed.  Sure enough, that document served as a “receipt” for our deposit, but it also served a more significant purpose.  That document was the contract by which we obligated ourselves to make the single largest purchase we’d made in our lives up to that point.

My wife occasionally points out that escrow officers don’t always know what to do with me.  Whenever we’ve closed a loan, or a real estate transaction, I always sit in the escrow office and read through the entire stack of documents, even if they are a foot high.  The escrow people often don’t seem to know what to do.  It seems like they’ve never had anybody actually wade through all of this stuff before.  Trouble is, I know what it means.  So I’m checking up on them – everybody – by reading all of the fine print.

Everybody tells me I should just sign the documents and take them home with me.  But if I do that, when will I read it all?  Never.  There’s no time like the present.  Plus, if I’m going to read it all, I may as well read it before I obligate myself to it.  Only if I read it can I know if there’s a potential problem involved.

It’s no surprise that non-lawyers who are involved in real estate transactions might get a bit bleary-eyed when confronted with such a stack of paper.  But there’s no defense based on the amount of paper involved in a transaction.  Except in unusual situations, Buyers, Borrowers, Lenders and Sellers who sign loan agreements or other documents are generally bound by such documents regardless of whether or not they read them.

So what’s a buyer to do when presented with a large stack of documents to sign?  Understanding all of the documentation involved in a real estate transaction is no small thing.  There are really only three options. First, Buyers and Sellers can choose to sign all of the documentation without reading anything.  This is certainly the quickest and easiest option, and it seems like some buyers opt for this approach.  But this is a risky approach if there are problems or potential problems.  Second, Buyers and Sellers can read the documentation on their own.  But real estate transactions are complex, and substantial education, experience, and training may be necessary in order to fully understand all of the elements of a real estate transaction. Most Buyers and Sellers lack the necessary training, education, and experience to fully understand and identify potential problem areas in a real estate transaction.  Third, Buyers and Sellers can rely on a professional to guide them through the process.  This professional can be a broker, an agent, an attorney, or another real estate professional.  This seems to be the approach taken by most Buyers and Sellers.  The quality of the advice and guidance received will depend in large part on the skill, experience, training and expertise of such a professional.


Robert B. Jacobs practices Real Estate and Business Law throughout the San Francisco Bay Area and California.   The foregoing article is not a complete discussion of the subject addressed, and should not be relied on.  Readers with specific questions or issues should consult an attorney.

Copyright 2023 ROBERT B. JACOBS